ISLAMABAD: Prime Minister Shehbaz Sharif has directed the concerned authorities to include $8 billion Diamer Bhasha Hydropower Project (DBHP) in China Pakistan Economic Corridor (CPEC) framework, well informed sources in Ministry of Water Resources told Business Recorder.
According to Wapda, potential benefits of the project include mitigating water storage; i.e., 6.4 MAF (Million Acre Feet) and hydrology that would be generated at the rate of 18.1 billion units per annum.
The cost of electricity to be generated from the project would be Rs 15 per unit as per dollar rate of last year. Foreign financing needs, beyond the already arranged $500 million, are at $3.5 billion, with equity of $1.2 billion and debt in foreign currency of $2.3 billion.
Financing of Diamer-Bhasha project: Govt weighing different options
The project is being financed out of Wapda’s existing tariff from hydropower generation, and only the cost of power generation component of the project would be recovered from consumers.
Wapda argues that it is a body corporate with a strong balance sheet footing, stable cash flow streams and a long-term off-take agreement; i.e., PPA with the Central Power Purchasing Agency- Guaranteed (CPPA-G) which is responsible for procurement of power from multiple sources for the national grid. Wapda’s revenue stream comprises energy sale proceeds and annual Public Sector Development Program (PSDP) grant fro water related infrastructure development.
Diamer Bhasha is being constructed in two phases, dam part and power generation facilities. PC-l for dam part was approved by ECNEC at a cost of Rs 480 billion in April 2018 and is now in implementation phase. The 2nd revised PC-1 for the LA&R component was approved at a cost of Rs 175 billion in Sept 2021. The PC-l for Diamer Bhasha power generation facilities was approved in April 2023, at a total cost of Rs 1,424.36 billion and includes local component of Rs 78.48 billion and Foreign Exchange Component (FEC) equivalent of Rs 715.88 billion ($ 2.55 billion.).
Minister for Power Sardar Awais Leghari recently informed the Senate Standing Committee on Power that those projects, including hydel projects, will be reviewed which are not least cost. He also mentioned the name of Diamer Bhasha Hydropower Project.
In another meeting in Economic Affairs Division, the Minister stated that feasibility study of transmission line will be carried out soon so that the government can have an idea about its exact cost. He was of the view that not having transmission line in time would have an additional cost to the project.
Federal Minister for Water Resources Musadik Masood Malik has argued that if 6 per cent or even 3 per cent GDP growth annually is achieved per year for the next 10 years and if already committed projects are not delayed, Pakistan is likely to have surplus electricity.
“If financial closure for the project is possible, I will support continuing with the project, notwithstanding the reputational cost if it is decided to slow down or not continue project execution,” the sources quoted Water Resources Minister as saying.
Ministry of Water Resources has conveyed the directives of Prime Minister to Power Division and PPIB regarding inclusion of DBHP in the CPEC for further processing.
Chinese firm M/s PowerChina is participating in the bidding for the second phase of underground powerhouse and other generation system works.
“Since PowerChina is undertaking RCC Dam (MW-1) Part of Bhasha Project, we are familiar with the project and have a lot of construction equipment and resources on site. If PowerChina undertakes the works of constructing subsequent power generation system, it can be assured of high quality and on-schedule delivery.
We will mobilize all our resources to assist the employer to secure finance, facilitating the early completion of this project,” Yanzhang, Chairman of the Company, said in a letter to the Prime Minister, Sharif.
Copyright Business Recorder, 2024